French telecoms group Iliad said on Monday it plans to acquire Polish mobile provider Play in a €3.5 billion deal.

Iliad, controlled by French tycoon Xavier Niel, said it had already agreed to buy 40% of Play’s shares from two private investors, Tellerton Investments and Kenbourne Invest II.

Iliad CEO Thomas Reynaud said: “This excellent alliance constitutes a new growth driver for the Iliad group and gives it access to one of Europe’s high-potential telecom markets.

“Pooling the expertise of Play’s and Iliad’s teams will reinforce the Iliad group’s fundamentals through a combination of growth and innovation.

“The transaction will make iliad the sixth-largest telecom operator in Europe.

“Fully committed to implementing its Odyssey 2024 Plan, Iliad is a solid group that is pursuing its expansion with confidence.”

Jean-Marc Harion, the chairman of Play’s management board, said: “This alliance with the Iliad group marks an important chapter in Play’s history, as it will accelerate its business development in fixed services.

“Play and Iliad share the same values and overall corporate vision.

“Our board of directors has unanimously approved the deal, firmly convinced of its strategic fit and value creation potential for Play’s shareholders.”

On the terms of the offer, Iliad said: “The strategy committee of HoldCo and the board of directors of Iliad have approved the launch of a public tender offer for all of the shares making up the capital of the Polish telecom operator, Play, for a cash amount of PLN 39 per share (representing a total of c. €2.2 billion for 100% of the share capital and an enterprise value of c. €3.5 billion).

“Iliad has signed a binding agreement to purchase a 40% controlling interest from Play’s two reference shareholders for the same unit price (i.e. PLN 39 per share), which will give iliad the majority of seats on Play’s board of directors.”

The offer represents a 38.8% premium to the Friday close of Play’s shares.